Don’t move, old people!

ON FIRST impressions the building site in Battersea, overlooking the park, looks like it will host just another stack of luxury apartments, so common in this corner of London. And indeed it will, but for one slight difference. The Battersea Place development is, uniquely for prime London, being built as a retirement village. Its 112 flats are available only to buyers over the age of 65—most are likely to be in their late 70s. As well as a restaurant, gym and swimming pool, the development will have a care home.

Britain’s population is ageing fast. The number of people older than 85 is expected to double by 2030. Yet Britain’s elderly are badly served by the housing market. Although 71% of people over the age of 65 own their homes outright, lots still live in large family houses, paying dearly to heat empty bedrooms and struggling with too-large gardens, broken boilers and council tax bills.

That is bad for old people, and contributes to Britain’s worsening housing shortage. According to data from the English Housing Survey, roughly 49% of owner-occupied homes have at least two more bedrooms than the government deems necessary. Among those who rent—either privately or from the state—the figure is just 13%. Neal Hudson, an analyst at Savills, a big estate agent, estimates that there are almost 1.2m inefficiently used homes in London and the south-east alone.

If old people could be persuaded to sell up, the young would benefit. Many want to. According to polling by Demos, a think-tank, 58% of older people are keen to move and one in four is interested in the idea of a retirement property. But they have few options. Britain has just 106,000 purpose-built owned retirement homes. Most one-bedroom and two-bedroom flats are built for first-time buyers, with little of the storage space and practical adaptations that older people need.

Partly, this is a matter of culture. British people are more cynical about the idea of retirement villages than Americans, says Claudia Wood, a researcher at Demos. Government “sheltered housing” built cheaply in the 1970s did much to undermine the reputation of purpose-built homes for older people. But the bigger problem is Britain’s planning controls, which distort the land market and make it extremely difficult for developers to build the sort of housing that older people would like to move to.

Many councils fear public services will be overwhelmed by an influx of old people. Fully 65% of planning applications to build retirement homes are initially rejected. Even with planning permission, the market for land makes it extremely difficult to build, says Gary Day, a director at McCarthy and Stone, one of the biggest providers of retirement homes. Since councils typically expect homebuilders to pay for infrastructure or for new social homes, builders struggle to pay as much for land as commercial developers, so many suitable sites become supermarkets instead.

Expensive land makes it almost impossible to build bungalows or other low-density housing and hard to build even retirement flats, which require lots of communal space. And since old people tend to need to be able to sell their existing homes before they can move, the market is hyper-cyclical. The Battersea Place development has taken six years to get going. It is only thanks to central London’s dramatic housing-market recovery that builders are on site.

One solution to this would be to force councils to prioritise homes for older people, perhaps by loosening requirements for infrastructure contributions, says Mr Day. Councils could zone some sites specifically for downsizers, for example, thereby freeing up bigger properties nearby. That makes some sense. But Britain’s housing crisis in general is largely a result of its restrictive planning laws. Loosening them for all builders would suit homebuyers of all ages.